Top Questions Asked by First-Time Buyers
Over half of first-time buyers are confused about what they need to do to take the first step onto the property ladder. It's understandable. The process is complex, involves a lot of jargon and, sadly, communication isn't always brilliant. We get it.
A study of 2,000 homeowners found that 54% were confused about what they had to do when making the first step on the property ladder. Here's some other interesting stats from the survey results:
- 8 in 10 felt too embarrassed to ask things like “what is stamp duty?” and “when do I need to pay everyone for the work?”
- Those new to the intricacies of buying a home also wanted to ask “how do I choose a solicitor?”, “what surveys do I need?”, and “how much can I afford?”
- As many as 36% were puzzled by the whole sequence of events
- 2 in 5 would have welcomed a helping hand
- 60% felt overwhelmed when talking to estate agents, solicitors, and mortgage advisors – with 68% worried about looking stupid.
- Unsurprisingly, almost 8 in 10 wish the home buying process was simpler
- Nearly half are put off moving again due to how complicated and confusing they found things first time around.
To help you during your first (or next) move, we've taken the 40 most popular questions (with answers!) that came from a survey from the Skipton Building Society and listed them below:
1. What surveys do I need?
There are three main surveys when buying a new home. Level one, two and three. Most surveyors don't offer level one as they believe it’s too basic. Level two used to be called homebuyers. Level three used to be called a full building survey. A level three is more detailed and more expensive. A level two survey will be sufficient for a standard modern home. Please ask us at Cooper Adams for advice of types and a good local surveyor, we can get pricing for you.
2. What is conveyancing?
Conveyancing is the branch of law specifically relating to the legal side of moving home. A conveyancer will go through the legal process to transfer property ownership from one person to another. A solicitor specialising in conveyancing will be more legally qualified than a licenced conveyancer.
3. What are the searches that solicitors carry out and what do they mean?
Searches are enquiries raised by the buyer’s conveyancer to various authorities to establish any issues likely to affect the property now or in the new future. Eg Local Authority for planning, Water and Environmental - the results could throw up problems you did not know about they will either need clarification or be a clean bill of health.
4. How much can I afford?
The best person to ask is an independent mortgage advisor. We have one at Cooper Adams. Always ask if they charge an admin fee, many charge £500, ours doesn't charge a penny. They will check your income savings and outgoings and advise how much you can afford and what the repayment figures are per month. They will also advise you what you could get if your income and deposit was higher.
5. How do I choose a solicitor?
We can help you on this. Some feel all solicitors are the same and do the same job. This is far from the truth. Some have hidden fees so the headline fee looks great but the end fee is the same as a better solicitor. Local solicitors make it easy to sign documents the same day (which can sometimes help the process). Most online factory solicitors are extremely slow which can mean you lose a sale or purchase.
6. Do I have to do a survey on the property?
No, you don’t have to. It’s like insurance - if you have one it can give you peace of mind and best advice say’s you should. Sometimes this discovers defects you didn't know about, sometimes they don’t. Don’t get confused with a mortgage valuation survey which the mortgage company carries out - they may or may not visit the property - they check the property is not high risk to lend against - ie structurally and the value is correct. If they visit it may only be for a quick 10-minute inspection.
7. How long should I fix my mortgage rate for e.g. is 3 or 5 years best?
Your mortgage broker will explain the best choices available according to the monthly cost and what the predicted cost may be at the end of a fixed term. This could be a fixed, mortgage, tracker or variable. Need advice from an independent broker? Give us a call.
8. How much notice will I be given about the moving date?
When your solicitor feels all the buyers and sellers are legally ready to exchange contracts they will ask everyone in the chain for a choice of moving dates - they will then select a date everyone can do, some chains want it asap, other chains may want several weeks. You may have to be flexible on your dates. The solicitor will come back to you before any date is set in stone to make sure you are 100% happy.
9. Why is property buying so much hassle?
There are a lot of legal checks to make sure the seller is the actual legal seller and the property you think you are buying is the actual property. There are also checks to make sure that nothing is hidden that may affect the value after you have bought the property. Property fraud in the UK is extremely rare because there are so many protections. Compare this with property transactions in countries like Spain where new homeowners have found out years later the land they live on was not allowed to be built on. Our legal system is old-fashioned (1000 years old) and tends to be slow. At Cooper Adams we ask our sellers to get the legal pack ready right at the start shaving many weeks off a transaction time. We also can help buyers get ready in advance to speed up the transaction.
10. How do I know what’s the best mortgage for me?
Our and most independent mortgage advisors will look at the whole picture, your financial position and what your needs are to give advice on the best mortgage. Many people like to lock in a low rate and payment so they know their budget, the advisor will scan all mortgages to guide you.
11. What is indemnity insurance and why do you need it?
This is a one-off payment insurance policy to protect you against claims to you. For instance, a missing certificate could pose a risk. This insurance covers the buyer for any legal action and costs for this missing certificate. There are other reasons solicitors would want an indemnity policy as well.
12. What’s the difference between a mortgage Decision in Principal and a mortgage offer?
A Decision in Principal (DIP) or AIP 'agreement in principle' or MIP ‘mortgage in principle’ is an indication that a lender could lend a specified amount, based on details you've provided about your income, spending and debts. In theory, if the buyer has been honest this proves the amount they can get on mortgage to buy. This can be arranged in a few hours.
A formal mortgage offer is guaranteed they will lend. This is done after further checks on the borrower and the property. This normally takes a few weeks.
13. What is stamp duty?
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. This tax has existed for over 300 years. How much do you pay depends on whether it’s your first home and the property value. Use our Stamp Duty calculator to work out how much you will pay.
14. What does it mean for me if the vendor doesn’t have correct paperwork for the home? (for example, boiler certificates are out of date)
At Cooper Adams we aim to get all this documentation in advance. If people have mislaid this and cannot get copies your solicitor will advise. Sometimes buyers have to accept that documents are missing.
15. How much deposit will I need?
The minimum mortgage deposit you’ll need depends on the lender you use. Generally, it ranges from 5% to 20% of the property’s purchase price. The higher the deposit the more choice of cheaper mortgage rates you will be offered. A buyer putting in more of their own money means they are a lower risk to a lender. Low risk means looking after the property and never missing a mortgage payment.
16. How soon after paying, do you get the keys?
Many property transactions in the UK take around four months (on average). On completion day (moving day) your solicitor will send the money to the solicitor representing the seller, for first-time buyers they could send it at 9.30am. It will then travel through the banking systems and in theory be instant but often could be an hour or so. When they receive the money they advise the selling agent to release the keys. We would hope for a first-time buyer this to be before 10.30am for other buyers it depends where they are in the chain, sometimes if you are higher in the chain it may be towards the end of the day as the money gets passed slowly up the chain.
17. Should I offer less than the advertised home price?
You need to consider your budget and if the property needs refurbishing. All buyers want to pay the lowest amount and sellers want the highest amount. If you feel the property is too high, offer lower and maybe the property is a great price and multiple offers are coming in. Don't overstretch yourself. Offers made depend on demand, you could try a lower offer and lose out to a better offer. Ask agents what the market is doing - if properties are selling quickly they may be going over the asking price, sometimes well over. If the market is level or prices reducing they may take a lower offer. Some agents price their properties correctly others may overprice them to make the seller happy or set a low price to attract lots of offers. An agent will advise you on the seller’s expectations.
18. What role does a solicitor play?
Your solicitor as a buyer will act for you and your mortgage lender to make sure you are buying s property with no legal risks. They will check the legal pack sent to them by the seller’s solicitor, carry out searches on the property (ie enquires made on your behalf by your solicitor / licensed conveyancer to various authorities that hold information about your property, the land it sits on or factors that may directly (or indirectly) effect it.) Raise enquiries to the seller’s solicitor (Ask questions that haven't been answered or unclear in the paperwork) Check all work done to the property has passed all legal checks. And organise all the legal paperwork and signing.
19. What’s the difference between fixed-rate and variable mortgages?
A fixed-rate is a set mortgage payment for a fixed time, maybe five years. A variable rate goes up and down in line with the Bank of England Base rate. A variable rate is normally cheaper when the base rate is falling. All rates are higher than the Bank of England rate - mortgage rates are higher due to risk factors, bank profit and the costs to run the mortgage lending company.
20. What insurance should I take out now I am a homeowner?
As soon as your solicitor tells you you have exchanged contracts you are legally liable for the property so you need to get it insured for fire or other damage.
21. How much will everything else cost me each month, such as bills.
Owning a home you will have regular monthly bills: Council tax (average UK £170pm), Electricity + Gas (£150pm), Water(£30pm), Insurance (£30pm), Mortgage (average £723) to name a few. How much your bills will be will vary depending on the property, mortgage product and location.
23. How much will mortgage payments be?
This depends on your interest rate and loan amount our mortgage calculator here: www.cooper-adams.com/mortgage-repayment-calculator says borrowing £270,000 at 2.50% for 30 years, your mortgage payments would be £998 per month. If you had a 10% deposit ie £30,000 you would be buying at £300,000.
24. What’s the difference between leasehold and freehold?
If you buy a freehold property, you’re purchasing the property and the land it sits on. In contrast, if you buy a leasehold property, you’re purchasing the property and not the land it sits on.
Most houses are Freehold and most flats are leasehold. The lease will have an end date but you can renew this. The reason there is a lease is this is a legally binding document sharing the land and responsibilities in maintaining the shared areas ie roof, gardens, drains and staircases. Mortgage companies prefer leasehold flats rather than freehold because of the legally binding lease.
25. How do you get a mortgage?
You need to speak to a mortgage advisor. They will look at the whole picture, your financial position and what your needs are to give advice on the best mortgage. They will advise if you can get a mortgage now or if you need to earn more or save a bigger deposit. When you are ready they will do the application for you. Contact us for a trustworthy recommendation.
26. What are management fees?
A management fee is part of the service charge payable to the managing agents in return for managing the leasehold property. This fee also will include the cost of services, repairs, maintenance, improvements, and insurance; or set aside as a reserve fund.
27. When do you sort out a mortgage?
The earlier the better, we recommend this to be done before you start viewing properties. You need to know how much you can borrow so you know your budget. Ask the broker to give you a certificate, ours will for you.
28. How long does my mortgage offer last for?
Typically, mortgage offers last between 3 and 6 months from the date they're issued. The length of time can vary from lender to lender. Quite often you can renew it if you haven't moved in when it ends.
29. Why do solicitors charge me to print things?
Most good solicitors don’t. Most of them have a standard set fee to include everything. Some make sundry charges for everything, legally they need to get your OK on all fees before they commence work.
30. When do I need to pay everyone for the work?
Our mortgage brokers don't charge a penny. All brokers get a commission from the lender some of the greedier ones also charge the borrower up front. A surveyor will want paying up front. Most solicitors want money up front to pay for searches this could be £500. Removal companies may want 50% upfront.
31. What do solicitors do all day?
Solicitors are very busy. Sometimes they deal with 120 cases at once. If everyone wants their case worked on weekly it means on average they deal with 24 cases per day - 20 minutes per week on your case isn't a lot. We feel, to get a better service, people should realise they would have to pay more. If solicitors charged double and reduced their workload by half they could allocate twice as much time to each case, in theory reducing the time to move by half.
32. Will it affect my mortgage repayments if I complete mid-month? Is it best to complete at the end of the month?
Your first mortgage repayment will be made in the month after you complete the mortgage. Your mortgage lenders will write to you to set out the exact date that the money will come out of your account. Most lenders allow you to change the date for your regular payments, so you can pick a date which is more convenient for you, perhaps because it is the same day that you receive your monthly salary.
It’s worth remembering that your first mortgage payment will usually be much larger than your regular monthly repayment. That’s because the first payment will include an initial interest payment, covering the interest for the days between the date you complete on the house and the end of that month. So let’s say you complete on the 10th. Interest will be charged from that date to the end of the month, and then added to your standard monthly payment the following month.
33. What does the estate agent do?
The estate agent’s day is made up of prospecting for new properties to sell or let, visiting the properties to discuss the process with the homeowner, preparing the property for market - including details photography, videos, and floorplans, conducting viewings, handling offers, dealing with the sales, updating sellers and buyers on a weekly basis, and all the paperwork involved.
34. Do I need to pay for brokers on top of everything else?
Always ask the mortgage broker if they charge an admin fee, many charge £500, ours doesn't charge a penny. The broker earns a commission from the lender anyway.
35. Is there a limit to how long a ‘chain’ can be?
In theory no. The shortest chain is two, a buyer (with nothing to sell) and an empty property. The bottom of the chain is always a buyer with nothing to sell, most often a first-time buyer. The top of the chain is always an empty property or one someone is moving out of into rented/overseas or with friends/family. Many longer chains that are waiting for someone to find may ‘break the chain’, which means moving into temporary accommodation and allowing the chain below to all move. Years ago, we dealt with chains of 20!
36. Can I pull out of the purchase at any point?
Yes, you are allowed to pull out on the day of exchange if you wish, for no reason at all, although morally and ethically it’s really bad. Sellers hate the uncertainty that buyers can walk away on a whim. Buyers also don't like the fact someone else can make an offer and the owner pulls out selling to you. At Cooper Adams, nearly all of our agreed sales are subject to a Reservation Agreement which locks both parties in legally. They can pull out for reasons beyond their control like chain collapse or serious problems on surveys. Our buyers and sellers like certainty and so do we.
37. Do I pay the deposit all in one go?
If you are not selling a home your solicitor will want the deposit paid maybe a week before the exchange of contracts.
38. What’s a mortgage broker?
A mortgage broker is an intermediary between a lender (bank/building society) that offers loans/mortgages that are secured with property and individuals interested in buying property who need to borrow money in the form of a loan to do so. The mortgage broker will work with both parties to get the individual approved for the loan. They also collect and verify all of the necessary paperwork that the lender needs from the individual in order to complete the home purchase. A mortgage broker typically works with many different lenders and can offer a variety of loan options to the borrower they work with.
39. Do I need to pay everything in one go or do I pay the 10% deposit first and the rest later?
Typically you pay your solicitor some money upfront ie £500, you would then pay their final bill at the end. You may need to pay a £500 lender valuation fee upfront or this can be added to the mortgage in some cases. You will need to pay a survey fee upfront, which could be as much as £600. Stamp Duty needs to be within 30 days of completion.
40. When do I pay my mortgage?
Your first mortgage repayment will be made in the month after you complete the mortgage. Your mortgage lenders will write to you to set out the exact date that the money will come out of your account. Most lenders allow you to change the date for your regular payments, so you can pick a date which is more convenient for you, perhaps because it is the same day that you receive your monthly salary. It’s worth remembering that your first mortgage payment will usually be much larger than your regular monthly repayment. That’s because the first payment will include an initial interest payment, covering the interest for the days between the date you complete on the house and the end of that month. So let’s say you complete on the 10th. Interest will be charged from that date to the end of the month, and then added to your standard monthly payment the following month.
At Cooper Adams no question is silly. We deal with home moving daily. Whether you’ve never moved or moved multiple times, things change often. We love helping people through the moving maze.
Whether you are buying, letting or selling, through us or anyone else, any question you have no matter how trivial please ask us. Call, message or pop in. It doesn't matter.